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Panelist Chuck Rutledge of Quintum Technologies answers our questions:
Q. IP Telephony's market share is increasing. What are your
predictions for continued growth of IP Telephony in the Enterprise space?
What about in the service provider space?
The growth in both the enterprise and the service provider space has
just begun. The industry to date has been largely driven by arbitrage
opportunities and those early adopters validating the benefits of
converging voice and data on a single network. Now that these benefits
have been proven and are better understood, we should experience
mainstream market growth.
The IP PBX has proven to
offer substantial benefits to the enterprise particularly in the SME
market. We will now see larger installations of IP based telephony
systems with broad deployments across branch offices. We will see
companies not just deploying IP telephony as PBX replacements, but also
expanding their existing voice networks based on VoIP while simultaneously
phasing out the legacy PBX equipment.
In the service provider market we are beginning to
see the move from VoIP being used to support low cost calling card
applications to mainstream telephony services. As enterprises are
deploying more IP telephony systems the service providers have the
opportunity to add even greater value by positioning themselves to offer
IP based services and provide off net VoIP connectivity. Also, telephony
markets around the world are deregulating, opening the markets for
competition. The next generation of telecom competitors will take be
taking advantage of VoIP benefits in deploying their networks. This
capability is creating new opportunities for service providers including
The enterprise market is interested in simplifying
their operations. VoIP allows service providers to efficiently offer
managed voice and data services and IP Centrex. These services not only
will save the company money, but will lower the cost of network
management and provide valuable features such as message management,
on-line provisioning with virtual phone numbers, support of remote
workers and follow me services.
Telcos and the CATV companies see both opportunity and threat in
convergence as they look to identify compelling offers to retain/
increase their customer base and revenue stream. They are also
threatened by the next generation service providers who are able to
utilize VoIP technology to substantially reduce the barriers to offering
voice based services. All parties see the need to support a bundle of
services over a converged infrastructure. None of the players can risk
not being able to deliver a bundle of services or the innovative
applications that VoIP based services will bring.
Another market that is prime for VoIP is providing
telephony services to those geographies in the world where the current
teledenisty is low and where deregulation is occurring. The cost of
deploying voice services with VoIP technology is an order of magnitude
less than utilizing circuit switch technology. Service deployment is
also not constrained by the availability of traditional telephony local
loop. Utilizing VoIP, a company can provision services anywhere an IP
network exists or can be easily deployed via technologies like broadband
Finally, expect the appearance of data and web
applications that have integrated IP telephony to create richer more
productive applications. We are seeing telephony become a sophisticated
data application, and as the infrastructure to support this application
develops we will see integration of voice and data at the application
level. Phone calls will not be the objective, but rather enhancing
applications with two way voice and video will be where the benefits are
Q. How do IP Telephony systems compare to
legacy systems on a cost basis? Does it make financial sense to move from
legacy systems to IP telephony? And what of the "soft" cost savings
(productivity, ease of use)...? What impact does that have on the decision
to adopt new technology?
IP Telephony systems not only offer the efficiencies of a single network
for both voice and data, but they actually cost less � and in some cases a
lot less. Today�s IP PBX systems are becoming more cost effective as the
technology matures. The call processing intelligence is moving toward
software that will be run on a standard server or softswitch, and
interoperable devices (VoIP gateways, IP phones, SBCs) are becoming
competitively available from a variety of vendors. We will begin to see
open source software solutions as well, offering both low cost and
opportunities for innovation. Service provides can deploy a VoIP POP for
a fraction of the cost of a Telco central office as is evidenced from the
proliferation of next generation service providers.
is now well understood that IP telephony systems have the advantage of
being managed as part of the data network infrastructure. The need for
telecom specific personnel is substantially reduced or eliminated,
providing a more flexible IT workforce. A VoIP network can centralize
much of its intelligence so the management of the network can also be
centralized � there is no longer a need to have diverse PBXs located
around the country and around the world. A service provider can
centralize the network operations and billing and remotely manage POPs
Inevitably, the key driver for IP Telephony will be
productivity enhancing applications such as the ability to support remote
workers, integration of voice and data for call center support, on-line
feature provisioning, etc. The choice to deploy an IP Telephony system in
a greenfield environment is pretty clear � the advantages of VoIP easily
outweigh traditional circuit switched systems. The more challenging
question is what to do when there is an existing circuit switched system,
yet there is a desire to take advantage of the benefits of IP telephony.
One easy approach is to address expansion needs by
utilizing IP Telephony. An enterprise has a number of choices. Many
PBXs now have the ability to be upgraded to support IP telephony, offering
the ability to migrate to VoIP while leveraging the existing PBX. They
can convert branch offices over to IP telephony as they swap out existing
PBXs. They can also deploy an IP telephony system next to the existing
PBX integrating it into a new and expanding IP telephony network.
Service providers face the challenge of integrating their existing
systems with the new VoIP systems. This will be critical as many service
providers will want to deploy a bundle of services to the end customer.
This will continue to be a challenge in the near future, but as the market
continues to mature, we should expect to see vendors offering solutions
for the integration of various operations and support systems with VoIP
are some of the specific steps the industry needs to take in order to
ensure continued growth and user adoption of IP Telephony? What are some
potential pitfalls and how should they be avoided?
A. One of the most valuable aspects of
IP telephony is its roots in open systems. The industry needs to continue
to push for resolution of standards and interoperability. The computer
industry has benefited tremendously from open architectures and the
ability to integrate equipment and software from different vendors. It
will be through the continued adoption of standards that innovation and
competition can advance the industry. This will accelerate the creation
of new applications and assure the applications are affordable and
The industry has moved productively forward in
adopting new protocols such as SIP. This has allowed interoperability
between vendors with the creation of such things as VoIP WiFi hand sets
and the integration of voice into IM. As the market develops there will
be the need to address such areas as QoS peering and security. The
industry will want to diligently pursue and adopt standards in these and
The area of regulation has been getting a lot of
attention. This will be an area that will create challenges for the
industry, particularly as the popularity of VoIP services grows.
Obviously the industry will want to avoid as much regulation as possible.
Substantial regulation could slow down VoIP adoption as well as the
development of applications. There are public interest issues that will
need to be addressed and will likely come under regulatory scrutiny, such
as 911/E911 and CALEA. These issues will inevitably not be avoided, so it
would be better to address the issues and prepare for solutions for them.
Another potential area that could be a pitfall is
security. As more of our voice communications becomes VoIP, the greater
the concerns about security will become. Just as security has become an
issue on the internet with regards to attacks and fraud, security issues
will become greater with IP Telephony. Wide scale IP Telephony
deployment will require that users feel that both their networks and their
calls are secure.
Finally as the industry moves into the mainstream,
there will be the need to effectively manage much larger scale networks
than are deployed today. Creating the network management and operations
systems that will allow service providers to scale their networks very
large will be required to achieve broad deployments of VoIP
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Rich Tehrani is TMC's president. He welcomes your comments.
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